Uno Bank reports a loan receivable from Davao Air in the amount of P50 million on January 1, 2016. Since the pandemic greatly affected the airline industry, Davao Air is currently facing financial difficulties. The initial loan’s repayment terms include 10% interest rate on outstanding balance plus annual principal payment of P10 million on December 31 of each year, starting on December 31, 2016. Davao Air has made timely payments of the loan and interest until December 31, 2019. In 2020, the Covid-19 pandemic hit the country and greatly affected the airline industry and since then, Davao Air is experiencing financial difficulties. Because of the financial distress being suffered by Davao Air, on December 31, 2020, Uno Bank concluded that the principal and interest currently due can be collected in the next three years but it is probable that no further interest can be collected. The probable amounts and timing of collections are determined as follows: P3M at Dec. 31, 2021 P4M at Dec. 31, 2022 P4M at Dec. 31, 2023 PV of a single payment of 1 at 10% for 1 period is 0.90909 PV of a single payment of 1 at 10% for 2 periods is 0.82645 PV of a single payment of 1 at 10% for 3 periods is 0.75132 Uno Bank recognized an impairment loss on its loan receivable from Davao Air on December 31, 2020. How much is the carrying amount of the restructured loan at December 31, 2021
Uno Bank reports a loan receivable from Davao Air in the amount of P50 million on January 1, 2016. Since the pandemic greatly affected the airline industry, Davao Air is currently facing financial difficulties. The initial loan’s repayment terms include 10% interest rate on outstanding balance plus annual principal payment of P10 million on December 31 of each year, starting on December 31, 2016. Davao Air has made timely payments of the loan and interest until December 31, 2019.
In 2020, the Covid-19 pandemic hit the country and greatly affected the airline industry and since then, Davao Air is experiencing financial difficulties. Because of the financial distress being suffered by Davao Air, on December 31, 2020, Uno Bank concluded that the principal and interest currently due can be collected in the next three years but it is probable that no further interest can be collected. The probable amounts and timing of collections are determined as follows:
P3M at Dec. 31, 2021
P4M at Dec. 31, 2022
P4M at Dec. 31, 2023
PV of a single payment of 1 at 10% for 1 period is 0.90909
PV of a single payment of 1 at 10% for 2 periods is 0.82645
PV of a single payment of 1 at 10% for 3 periods is 0.75132
Uno Bank recognized an impairment loss on its loan receivable from Davao Air on December 31, 2020.
How much is the carrying amount of the restructured loan at December 31, 2021
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